APM Four seasons of risk - Scotland: Identification
Four Seasons of Risk 6th February 2013 Risk Identification Steve Smith
Basis of discussion You have a PRAM Guide, so I will not summarise that I will not address why we need RM I will focus on dimensions of risk identification, largely drawn from experience, that may help to shape your thinking and approach… or at least stimulate debate!
Project Success Criteria Before you start… Understand the Aims and Requirements – Use them as context to check whether identified risks and opportunities can feasibly impact the project Understand the boundaries/drivers – What can the project control/influence? – What does the business/organisation control? – What is beyond the boundary? – Assumptions & Dependencies cross the boundary
Risk Identification The important foundation – Obvious; but get this wrong and all subsequent RM activities could be undermined Many Standards and RM literature such as the PRAM Guide provide a comprehensive range of tools and techniques – Important to select those that are right for your project and organisation – Don’t use them all, but use more than one
Characteristics of Identification Start top down – use any ‘breakdown structures’ with prompt lists Use a few complimentary techniques Use understandable terminology – The Stakeholder Test Visualise future situations – Stage/phase reviews Use learned experience (not just checklists) – relevant to the business Group risks together if ownership and cause is similar
When to Identify Risks? Many studies (and experience) shows that risks are introduced or missed in the bid or proposal phase Risk identification usually focuses on ‘the project’, but the project really starts at ‘Gate 1’, the decision to bid – Early risk/opportunity identification can guide the bid phase – Include ‘bid risk’, not just ‘project risk’
PESTLE Root cause analysis of risk impact events often exposes ‘environmental’ factors The PESTLE analysis tool can be useful for framing risk identification Three cases are given as examples of impacts that could have been avoided if the business or project environment had been considered early enough…
Case 1: Resource Costs Recent ME metro project Assumption that resources could be deployed from subsidiary in neighbouring country No-one checked that it was viable In fact, the foreign nationals were not ‘welcome’ and European replacements were 2.5 x budget PeStle!
Case 2: Requirements Recent ME international airport project Understanding of interface between own Contract Package scope and others CP scope was not complete ~€2M hardware scope not included in budget or plans IT specialists were unfamiliar with construction practices and works pesTle!
Case 3: Accessibility G8 nuclear security project Assumption that foreign contractors could operate in Russia In fact only Russian-certificated organisations are licenced to carry out ‘work’ Several programmes had to be reconfigured and re- tendered causing significant delays and rework costs pestLe!
…and remember ‘What gets measured, gets managed …even when it’s pointless to measure and manage it, and even if it harms the purpose of the organisation to do so.’
Summary Get senior management and stakeholder buy-in Start early; include bid/proposal risks Start simple; top down Use a few techniques Consolidate Repeat at stages/phases Think laterally Good facilitators are worth their weight in EV